Told that OYO has filed its draft prospectus for initial public offering (IPO).Two people with direct knowledge of the matter said Zostel is planning to ask the Securities and Exchange Board of India (Sebi) to stop the proposed $1.2 billion IPO. expected to send a letter to zostel Self Sources said after the hearing of their ongoing dispute by the Delhi High Court on October 7.
While Oyo has challenged the Supreme Court-appointed arbitrator’s decision in the High Court, Zostel filed an application in late August seeking to restrain Oyo from revising its cap table through an IPO. at
The matter was first reported on 28 September.
Zostel plans to tell SEBI that Oyo is seeking a share sale in violation of the listing rules, while an arbitration award is pending in court. It has been learned to seek legal opinion in this matter.
‘IPO papers give incomplete picture’
A person familiar with the discussion said, “Besides the issues being done in court and what is in the public domain, they (Jostel) can also tell the regulator that OYO in its draft IPO prospectus did not give the full picture of the controversy.” given.” .
Based on the court proceedings, ET had reported last week that Amit Sibal, representing Zostel, had said the company did not intend to stall OYO’s IPO, but asked the court whether Oyo’s shares were kept in an escrow account. Until the court has ruled on Oyo’s challenge. Arbitrator’s Award. Sibal argued that this would protect Zostel’s rights over a 7% stake in Oyo, which he feels should get it. Oyo’s lawyers contested the claims in a brief discussion last week.
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at the root of the issue is a
2015 contract signed by two companies To acquire Oyo’s smaller rival Zostel. The deal failed, but Zostel is arguing in court that it is still entitled to about 7% in OYO parent Orawell Stays. NS
The arbitrator had said in March that the term sheet between OYO and Zoe was binding And OYO stopped taking steps to meet obligations under it after a time. The order said that Zoe was “entitled” to take “appropriate action” for its rights and work towards a “definite settlement” with OYO for itself and its shareholders. As the dispute reached the court, OYO held the said term sheet non-binding and challenged the arbitrator’s order.
Oyo is
had earlier told ET in a statement That Zostel is not awarded 7% in the company and is trying to distract Oyo from pursuing its business goals. Zostel’s legal advisor did not immediately respond to ET’s questions.
Can SEBI stop Oyo’s IPO?
“SEBI can certainly intervene, which may delay the IPO. However, SEBI cannot stop the IPO completely. “In the last few months, we have seen SEBI put on hold several high-profile issues.”
As such, SEBI does not give any explicit approval for the IPO – it just issues an observation sheet. If it issues such a letter without comment, it is treated as proceeding.
Legal experts say if SEBI intervenes, it could have two consequences. If it finds substance in the allegations that it has misrepresented facts in the offer document, it can ask OYO to either redo the document or issue a corrigendum.
Another person with direct knowledge of the matter said, “On the pending litigation front, SEBI may put the IPO on hold for up to three months, if the probe is being conducted by SEBI.” “However, at present matter“Proceedings are pending before a high court, so the IPO can only be stayed till the court gives its verdict,” the person said.